More Chief Executives Look to Digital for Growth: Gartner

But many have no metric for digital progress

ORLANDO, Fla. -- As digital tools and capabilities sweep through industries, chief information officers and other senior IT managers are finding a new and eager partner in business technology – chief executive officers.

According to Gartner Inc. researcher Mark Raskino, a growing number of CEOs are shifting their views on digital-enabled tools, such as cloud computing, artificial intelligence or machine learning.

Rather than seeing them simply as an overlay to existing systems, aimed at boosting internal efficiency, or cutting costs, many business leaders today are looking to digital capabilities to drive revenue growth and generate profits, he said.

“Digital business is deepening,” Mr. Raskino told CIOs gathered in Orlando last week at Gartner’s annual IT conference. “For a generation of CEOs, digital business is going to be a career defining issue for them,” he added.

In a Gartner survey earlier this year, of roughly 380 CEOs and senior business leaders, 58% identified growth as a top priority, up from 42% in a similar survey last year. At the same time, IT-related projects and initiatives also rose, to 31% from 18%, as well as product innovation, to 20% from 10%.

About half of the respondents led companies with more than $1 billion in annual revenue.

For Mr. Raskino, that reflects a new mode of thinking among business leaders, who are now saying, “I’ve got to grow. I’m going to grow with product innovation. And that product innovation, a chunk of it, is going to come from digital,” he said.

“To have CEOs this focused on technology as an area of opportunity is unnatural,” Mr. Raskino said: “It’s not normal for them, it’s not something they grew up with, they’re not necessarily comforted by it, but it’s true and they know they need to do stuff and they know they need to do more,” he said.

For their part, CIOs need to recognize that when most business leaders say ‘digital’, in their minds it is all about revenue, customers and products, Mr. Raskino said.

He said there’s often a temptation for CIOs to “backhaul the word digital” against the more traditional role played by IT departments, which sought out internal efficiency and smooth operations – or what is often dubbed “keeping the lights on.”

CIOs instead need to help business leaders define what “digital” means for a given company, he said, adding that a clearer definition allows companies to gauge success of a digital business initiative – among the CEOs surveyed this year, nearly half had no metric for digital progress.

Likewise, only 6% said they defined, measured and published digital revenue externally, compared to 21% who said they had a “rough estimate” but didn’t disclose digital revenue, and 46% who didn’t distinguish digital revenue in any way, the survey found.

Mr. Raskino said CIOs have to be a “catalyst and role model for this shift” to digital, while being more decisive about where spending needs to go.

All of this requires CIOs to take an active role in developing new ways to quantify and measure digital progress.

“You cannot scale what you do not quantify,” he said: “Digital cannot be fluff.”